Analysts are becoming increasingly optimistic about shares of the online travel website and think it offers one of the most compelling risk/reward trade-offs among internet stocks.

"The company is in the middle of a major acceleration from improving conversion rates as a result of its recent website and platform upgrade," said analyst Ross Sandler. "At 14x 2013 EPS, EXPE still trades at a 22% discount to Priceline (Nasdaq: PCLN), and we believe consensus EPS estimates could be as much as 15% too conservative for 2013."

When evaluating Expedia, the key metric used to measure progress is hotel room night growth, which they believe is poised for acceleration on the back of the platform overhaul.

“Expedia is coming out of a 4-year investment cycle allowing growth to accelerate and margins to expand on the back of its technology platform upgrade. Shares remain undervalued vs. the peer group, especially considering the re-acceleration in growth and margin expansion potential in 2013, and consensus estimates don’t appear to capture the opportunity,” said Sandler.

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